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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `G' NEW DELHI
BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
AND
SHRI JOGINDER SINGH, JUDICIAL MEMBER
I.T.A.No.5523/Del/2013
Assessment Year : 2010-11
Income Tax Officer, vs Sheoran Infrastructure Pvt. Ltd.,
Ward-8(2), GF 25A, Indraprakash,
New Delhi. Barakhamba Road,
New Delhi.-1100001
(Appellant) (Respondent)
Appellant by: Ms Y.S. Kakkar, Sr. Adv.
Respondent by : Shri S.K. Chaturvedi, CA
ORDER
PER JOGINDER SINGH, J.M.
This appeal has been preferred by the revenue against the order of
Commissioner of Income Tax(A)-XI, New Delhi dated 11.07.2013. The
first ground raised by the revenue pertains to deleting the addition of
Rs.10,95,000 made on account of difference between purchase consideration
and circle rate of the property. The crux of the argument on behalf of the
revenue advanced by Ms. Y.S. Kakkar, ld. Sr. DR is in support to the
assessment order by submitting that the addition was rightly made by the
AO. On the other hand, Shri S.K. Chaturvedi, ld. Counsel for the assessee
defended the conclusion drawn in the impugned order.
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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
2. We have considered the rival submissions and perused the material
available on record. Before coming to any conclusion we are reproducing
hereunder the relevant portion from the impugned order:-
"6.1 Ground No. 1 of appeal is against the addition of
Rs. 10,95,000/- made by the A.O. The AO made the
addition as it was found by him that the appellant
company purchased the land at a value of Rs. 40 lac,
which was less than the value of said land as per circle
rates (Rs.50,95,OOO/-). The inquiry letter U/S 133(6) of
the Act issued by the AO remained unserved due to the
death of the seller, which was brought to his notice by the
appellant. The A.O. made the addition merely on the
ground that circle rate of the property was more than the
amount shown in the sale deed. However, in his over-
enthusiasm, the A.O. lost sight of the fact that provisions
of section 50C of the Act are applicable on the seller only
for computing the capital gains. Provisions of sec. 50C is
a deeming provision which creates a legal fiction for a
definite purpose and its onus should not be extended
beyond the purpose for which it been created. In the case
of the purchaser, it is the onus of the A.O. to establish
through inquires that the purchaser had actually paid
more than what is written in the sale deed. Merely
writing an inquiry letter to the seller u/s 133(6) of the Act
for confirmation of sale amount or asking the AR for
approaching the legal heirs of the deceased seller to
confirm the sale amount directly to the AO cannot be
termed as any fruitful inquiry made by the AO. By doing
such unilateral exercise, the AO did not find any adverse
material to establish that the appellant company paid the
amount as per circle rates and not the amount as
mentioned in the sale deed. Further, it was not the
liability of the assessee to obtain the confirmations from
the legal heirs of the deceased seller, as the documentary
evidence in the shape of sale deed was sufficient for the
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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
purchaser as far as transaction amount was concerned.
The appellant has relied upon various decisions,
including that of Hon'ble jurisdictional Tribunal in
support of its argument that the difference in the value as
per actual cost and the value as per stamp authority
cannot be taxed in the hands of the purchaser of the
property in the absence of some adverse evidence
available to prove and corroborate the difference.
6.2. The appellant has further argued that the addition
made by the AO cannot be justified as per provision of
section 69 of the Act also. To invoke the provisions of
section 69 of the Act, there must be some undisclosed
investment for which the assessee cannot explain the
source. The argument of the appellant has force since
there was no dispute regarding the source of the amounts
mentioned in the sale deed and there was no material
evidence gathered by the AO, which could prove that the
appellant had made any undisclosed investment in the
purchase of the said property. The appellant has also
relied upon the decision of jurisdictional High Court in
support of its argument.
6.3. In view of the above discussion, it is held that the AO
was not justified in making addition of Rs. 10,95,000/-
i.e. the difference between the value of the property as
per circle rate and the purchase price shown as per sale
,deed in the hands of the purchaser company. The same
is directed to be deleted. The ground of appeal No. 1 is
allowed."
3. If the conclusion drawn in the impugned order, observation made in
the assessment order, assertion made by the ld. Counsel and the material
available on record are kept in juxtaposition and analyzed, we find that the
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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
ld. AO made the addition on the ground that there was difference between
the circle rate and the amount shown in the sale deed. The facts in brief are
that the assessee purchased agricultural land from Shri Raghu Nath on a total
consideration of Rs.40 lakh and also spent Rs.3,61,840 on the registration of
the same. The details of payment were filed by the assessee. The ld. AO
was of the view that the circle rate of the land was Rs.50,95,000 and thus, he
made addition of differential amount of Rs.10,95,000. The ld.AO sent the
notice to the seller of the land but due to his death, the same could not be
served. The assessee filed the death certificate of the seller. Admittedly, no
adverse material was brought on record by the AO. Now the question arises
whether addition u/s 50C can be made under the facts narrated hereinabove.
We are of the considered opinion that the provisions of section 50C of the
Act are applicable on the seller for the purposes of computing capital gains.
Section 50C is a deeming provision which creates legal fiction for a definite
purpose and the onus should not be extended beyond the limit/purpose for
which it was created. In the case of the purchaser, a heavy burden is cast
upon the AO that the assessee actually paid more than mentioned on the sale
deed. Under the facts available on record, no adverse material has been
brought to our notice on the basis of which it can be established that any
underhand money transacted hands between the seller and the purchaser.
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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
The assessee has discharged its onus by producing the copy of the sale deed
and the source of the money which was utilized for purchasing the property
and further no underhand transaction was made. Even otherwise for
invoking section 69 of the Act, there must be some undisclosed investment
for which the assessee is unable to disclose the source. Except the amount
mentioned in the sale deed, no adverse material was brought on record to
prove that the assessee in fact made undisclosed investment for purchasing
the property. In view of this factual finding recorded by the ld. CIT(A), we
find no infirmity in the same as the same has not been controverted by the
revenue with the help of any corroborative material. On this ground, the
stand of the ld. CIT(A) is affirmed, resulting into dismissal of this ground.
4. The last ground raised by the revenue pertains to deleting the addition
of Rs.1 lakh made on account of interest. The grievance of the revenue is
that the AO was not directed to carry out further investigation. The ld. Sr.
DR defended the addition whereas the ld. Counsel for the assessee supported
the conclusion drawn in the impugned order. On perusal of record and after
hearing the rival submissions, we note that the addition was made by the AO
as notional interest on advance of Rs. 1 crore to Shri Deepak Ansal on the
plea that the assessee advanced the amount to him for purchasing the
property. In the absence of any purchase/sale agreement, the AO opined that
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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
the amount of Rs. 1 crore was interest bearing loan and he made addition of
Rs. 1 lakh on account of interest for one month. The claim of the assessee is
that the amount of Rs. 1 crore was made to Shri Deepak Ansal against
property no. 1201C, Antariksh Bhavan, Delhi as advance money. To
substantiate its claim, the assessee filed the details of bank account, ITR and
confirmation. The assessee further claimed that it was out of interest free
capital of the assessee and not out of interest bearing funds. No evidence
was gathered by the AO to establish whether any interest bearing funds were
paid to Shri Deepak Ansal. In view of this fact, we find no substance in
making the addition and thus, affirm the stand of the ld. CIT(A).
Consequently, we find no substance in the appeal of the revenue.
Finally, the appeal of the revenue is having no merit, therefore
dismissed.
This order was pronounced in the open court at the conclusion of the
hearing on 9th April, 2014.
Sd/- Sd/-
(S.V. MEHROTRA) (JOGINDER SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
DT. APRIL 2014
`GS'
Copy forwarded to-
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ITA No. 5523/Del/2013
Asstt.Year: 2010-11
1. Appellant
2. Respondent
3. CIT(A)
4. CIT 5. DR
By Order
Asstt. Registrar